Stocks briefly pared gains as risk appetites in American
capital markets diminished amid the U.S. budget impasse, pushing
Treasury one-month bill rates to the highest since 2008. The
MSCI Emerging Markets Index added 0.4 percent to 1,008.89.
Russia’s Micex Index jumped to a seven-month high as Lukoil and
Mechel increased more than 1.6 percent. Tata Motors Ltd. climbed
to a record in Mumbai. Mexico’s IPC Index dropped to a one-month
low as America Movil SAB tumbled.

President Barack Obama said the U.S. economy risks a “very
deep recession” if Congress doesn’t raise the $16.7 trillion
debt ceiling. Senate Majority Leader Harry Reid said the
Republican-controlled House should vote to end the government
shutdown and drop demands to change the Affordable Care Act,
while House Speaker John Boehner said Reid and Obama should
negotiate. Rates on one-month bills more than doubled to 0.33
percent, the highest since October 2008.

“The Congress has to resolve it,” Timothy Ghriskey, the
chief investment officer at Solaris Group LLC in New York, which
manages over $1.5 billion, said by phone. “But there’s no
resolution yet, and it’s a big overhang for the U.S. markets and
really any country that’s exposed to the U.S., either through
its investments or trade.”

‘Seriously Damage’

Investors also weighed prospects for growth after the
International Monetary Fund cut its global outlook for this year
and next as capital outflows further weaken emerging markets and
warned that a U.S. government default could “seriously damage”
the world economy.

Eight out of 10 groups in the MSCI Emerging Markets Index
increased today, led by energy and financial shares. The
benchmark measure for developing nations has dropped 4.4 percent
this year to trade at 10.5 times projected earnings, compared
with the valuation of 13.6 for the MSCI World Index, according
to data compiled by Bloomberg.

Mexico’s IPC Index fell the most among major developing-nation gauges, as America Movil dropped 2.1 percent. Brazil’s
Ibovespa fell for a second day, led by MMX Mineracao e Metalicos
SA, the iron-ore producer controlled by Eike Batista. Mining
company Vale SA slid after saying the market for iron ore will
probably be oversupplied by 2015.

Russia, India

Russian stocks advanced for a fourth day as crude oil, the
country’s main export earner, increased. Lukoil, the nation’s
second-largest oil producer, surged to the highest level since
July 2008. Gazprom posted the biggest jump in a month. Benchmark
gauges in Turkey, Poland and the Czech Republic fell, while
Hungarian shares rose.

Indian stocks climbed to a two-week high as Reserve Bank of
India Governor Raghuram Rajan rolled back an emergency step
taken to shore up the currency, cutting the marginal standing
facility rate to 9 percent from 9.5 percent after the rupee
jumped from a record low in August. He raised the benchmark
repurchase rate last month to fight elevated inflation. Tata
Motors extended this year’s gain to 12 percent.

The Shanghai Composite Index added 1.1 percent, the biggest
gain since Sept. 23. China’s markets were shut from Oct. 1
through yesterday for the National Day holiday. China Vanke Co.
and Poly Real Estate Group Co., the nation’s biggest developers,
advanced at least 4.6 percent.

Zimbabwe’s Rally

Zimbabwe’s benchmark stocks index rose for a 16th day, its
longest winning streak in a year, as investors speculated
President Robert Mugabe’s government will put in place policies
supportive of economic growth. The 73-member Zimbabwe Industrial
Index extended gains since Sept. 17 to 12 percent.

The premium investors demand to own emerging-market debt
over U.S. Treasuries declined two basis points, or 0.02
percentage point, to 330 basis points, according to JPMorgan
Chase & Co.